The news was not well-received on social media.
"This is approaching WeWork level idiocy by shareholders," one person said on Twitter. "At least it’s a minority vote, I suppose."
The comment was directed toward Shopify (SHOP), whose shareholders approved a propoal giving CEO Tobias Lutke, his family and his affiliates 40% of the total voting power at the Ottawa-based e-commerce platform during the June 7 annual meeting, according to the Globe and Mail.
'Awful Corporate Governance'
The comparison to WeWork (BOWX) --the scandal-plagued real estate company run by Adam Neumann, whose exploits inspired both a documentary and the Apple TV+ scripted series "WeCrashed"--is clearly a matter of opinion.
"Tobi can now sell down his stake in the company to as low as 1.1% and still retain 40% of the voting power," another person tweeted. "Awful corporate governance."
Shopify's numbers are rather shocking. The company's stock has plummeted nearly 74% since January, with shares closing at $360.62 on June 6.
The company's market capitalization on December 31 was $171.98 billion. Just six months later, on June 6, the market cap had dwindled to $44.65 billion. Market capitalization has shrunk by more than $127 billion in six months.
Late last month, proxy adviser Glass Lewis had issued a Controversy Alert on Shopify advising shareholders to vote against the proposal. Institutional Shareholder Services, another proxy adviser, also came out against the proposal.
Shopify did not immediately respond to a request for comment.
Shareholders also approved a 10-for-1 stock of the company's class A and class B shares.
"Haha Shopify doing a 10-1 stock split," one person said on Twitter. "Desperation in tech markets is here."
'It's Time to Build'
"Not sure why a $400 and possibly a $300 stock needs a split," another commenter said. "Hoping to save the falling knife I guess."
On May 11, Lutke took to Twitter himself to say that he had bought $10 million worth of Shopify stock.
Lutke made the announcement after the venture capitalist Amish Jane tweeted about the CEO and Shopify president Harley Finkelstein.
"Great companies are built by great leaders. Having known @tobi and @harleyf from the earliest days and knowing the incredibly strategic assets $SHOP has, it feels like the market has over rotated and is missing a great opp to buy."
"Thank you Amish," Lutke replied. "Totally agreed on this being a market over rotation. I just placed a $10m order for $SHOP stock myself. It's time to build."
Building is something Lutke appears to enjoy. As a child he rewrote the code of computer games and modified computer hardware as a hobby.
He moved from Germany to Canada in 2002 and two years later, Lutke and his partners, Daniel Weinand and Scott Lake, launched an online snowboard shop, Snowdevil.
Going Public
The Snowdevil founders shifted their focus from snowboards to e-commerce and launched Shopify in 2006.
The company went public on May 21, 2015, and in its debut on the New York Stock Exchange, started trading at $28, more than 60% higher than its $17 offering price, with its IPO raising more than $131 million.
Shopify has had some tough times recently. On May 5, shares tumbled after the company posted weaker-than-expected first quarter earnings and unveiled plans to buy logistics company Deliverr for around $2.1 billion, as it looks to support its fulfillment challenges linked to the supply chain disruptions.
Adjusted earnings came in at 20 cents a share per share, compared with a profit of $2.01 a share over the same period last year and a Wall Street consensus forecast of 77 cents a share.
Revenue rose 22% to $1.2 billion, the company said, while gross merchandise volumes rose 16% to $43.2 billion but missed Wall Street's forecasts of a $45.4 billion tally.
'The Commerce Platform of Choice'
"While we’ve experienced massive macro shifts since the start of the pandemic, the one mainstay has been that Shopify is the commerce platform of choice for merchants in any environment, with the ability to support commerce on any surface,” Finkelstein said in a company news release.
Last month, Jefferies analyst Samad Samana slashed his price target on Shopify to $475 from $550 while keeping a buy rating on the shares.
The analyst had lowered numbers for several software companies and reduced price targets "across the board."
He noted stiffening economic headwinds and the looming risk of recession, considering factors that include end market exposure, cash flow support, exposure to Europe, and historical gross-net retention, which is the percentage of recurring revenue retained from existing customers, including downgrades and cancels.
Several recent datapoints suggest consumer behavior is changing quickly and that demand may also be softening, Samana said, while commentary from big box retailers raised concerns on a mix shift and a slowdown in consumers' e-commerce spending.
